FAQ

Why do investors choose timberland as an investment?

Timberland investing has multiple benefits including portfolio diversification, serving as a hedge against inflation, and a low correlation with other investment instruments such as stocks and bonds.

What types of investors does timberland attract?

Timberland attracts both private and institutional investors, including pension funds, corporations, foundations, endowments and family offices.

How long does it take to grow a tree?

Depending on species and site conditions, it can take anywhere from 10 to 80 years for a tree to develop into merchantability. Good timberland investment properties generally contain a diverse mix of age classes and, in some cases, species present on the property. The rate at which trees grow however, does not necessarily impact future performance.

How are timberland investment returns generated?

Timberland returns are realized through timber sales, lease income and land sales.

How much money have institutional investors placed in timberland?

As of December 31, 2016, Timberlink’s survey reports $49 billion of timberland assets under management globally.

While considered negligible on professionally managed properties, the risk most commonly associated with timberland is the risk of fire. By maintaining healthy forests through active management and reducing dead and dying trees, the risk of fire is greatly minimized (see below). Disease, endangered species, and timber theft, all negligible on professionally managed properties, are other types of volume risks attributed to timberland.

How is timberland investment risk mitigated?

The risks of timberland investment can be minimized by actively managing properties in a sustainable manner; maintaining healthy trees. Aside from active management, diversification among timber regions reduces the volatility within individual markets.

What are the liquidity characteristics of timberland?

Timberland investing generally requires a commitment of 10 years or more to the asset class and is illiquid relative to stocks or bonds. However, if an investor wishes to liquidate their timberland holdings, the disposition process can be initiated quickly.

Who buys timberland?

What happens if there is a forest fire?

Historically, less than 0.5 percent annually of commercial timberland owned by institutional investors has been damaged by fire, insects, disease and other natural hazards. In addition, history has shown that 80 percent of all timber harvested following a forest fire is merchantable. For instance, when Mt. St. Helens erupted in Washington in 1980, 85 percent of the timber salvaged was sold for sawtimber or pulp. By building and maintaining excellent road systems, diversifying timberland ownership and using modern forest management techniques such as fire breaks, timberland investment managers can minimize fire’s impact on portfolio performance.

How is a timberland investment portfolio diversified?

Timberland investments are typically diversified by property location, timber market, tree age, species and end products. Most importantly, by investing in timberland among different regions, investors can offset the risk associated with investing in only one area.

What factors affect the price of timberland?

There are several factors that affect timberland prices, but the most important include current and projected timber prices, timber inventory, investments in forest productivity, operating costs and the required rate of return or discount rate.

What is the history of your group?

The Hancock Timber Resource Group was established in 1985 as part of the John Hancock Mutual Life Insurance Company to focus solely on timberland investing for institutional clients. We offered the first of nine timberland investment funds in 1985 and began establishing individually managed accounts in 1987. In 1995, we became part of an independent subsidiary of John Hancock called the Hancock Natural Resource Group, Inc. The Hancock Natural Resource Group, Inc. consists of the Hancock Timber Resource Group, the Hancock Agricultural Investment Group and the Hancock Renewable Energy Group.

What types of returns has your group generated?

As of December 31, 2017, our timberland investment portfolio has produced an average annual return of 10.9%, after fees, since inception (1985).

What is the market value of your timberland portfolio?

The market value of our timberland portfolio is approximately $11.0 billion (as of December 31, 2017).

Where do you purchase timberland?

We evaluate timberland acquisition opportunities worldwide. Our current investments are in the U.S., Canada, Australia, New Zealand and Chile. We are continuously monitoring timber producing regions around the world for acquisition opportunities that benefit our clients.

What types of properties do you purchase?

What is your group's international investment experience?

We made our first timberland investment outside the United States in 1993 in British Columbia, Canada. As of September 30, 2017 approximately 38 percent of our assets under management reside outside the U.S. We are the largest private timberland owner in both Australia and New Zealand.

Does the Hancock Timber Resource Group have any international clients?

Yes, currently we have numerous clients located throughout Australia, Canada, New Zealand, Japan and Europe.

Who conducts your group's investment research?

Within HTRG exists an Economic Research division, comprised of full-time research professionals and staff. The Economic Research division performs a host of functions, from providing timber price forecasts bi-annually, assessing the appropriate rate of return from timberland based on the state of capital markets as measured against the risk of individual timberland regions, to analyzing specific aspects of timberland investment such as large-property discounts and the value of timberland in public and private markets.

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